The Era of New Manufacturing: Li Shufu and the super manufacturing of Geely and Volvo (translated)

“When a bamboo sprouts from the ground and enters the public’s view, we should know that it must have experienced harsh cold, the melting of ice and snow, gathering sufficient variables and potential energy.”

“As a revolutionary sacred place, Jinggangshan welcomed over 28,000 troops from the Nanchang Uprising 90 years ago, leaving only over 800 people. Military expert Jin Yinan wrote in the book “Blood and Glory” whether these 800-plus people could be preserved. For the lost and dispirited, these were defeated remnants; for those with grand ambitions, they were a spark capable of igniting a prairie fire.”

“When Li Shufu put all his eggs in the “car manufacturing” basket, he was no longer an ordinary businessman; he was learning to be an entrepreneur.”

“Starting in 2002, Li Shufu had been eyeing Ford’s Volvo. After several twists and turns, he finally achieved his wish eight years later. Li Shufu’s acquisition introduced him and Geely to the world. The changes brought to Geely by this acquisition were evident. Volvo’s three factories, more than 10,000 patents, and complete technology research and development system could feed back into Geely’s tech R&D, forming a balanced product line and complete manufacturing system. The change brought to Li Shufu can be described as “impact.” Volvo’s supply chain, employee training system, safety test center, large-scale testing grounds, and global sales and service network taught Li Shufu to use global business thinking, experiencing the art and wisdom of management in the conflicts and integrations of different cultures.”

“As the first private car enterprise, starting in 1997, Geely was determined to make good cars affordable for the average person. In 2007, Geely transitioned from price competition to leading in technology and performance. After acquiring Volvo in 2010, Geely began a second transformation, shifting from “Technological Geely” to “Quality Geely.””

“However, this competition did not leave room for China’s private enterprises. China remains an atypical modern country, where the government controls unlimited resources, and large state-owned capital groups dominate the upstream of industries and participate in policy-making.”

“Around 1997, more than eight private enterprises in Zhejiang and Jiangsu provinces alone proposed car manufacturing strategies. Others left themselves a way out, making car manufacturing a “big bait” while not giving up their original industries, hoping to gain government support and bank favor. Only Li Shufu was the most “crazy” and “foolish.” Once he mentioned car manufacturing, he put all his life’s worth on the line without any distractions.”

“The 2008 global financial crisis provided Chinese capital with the opportunity to acquire quality assets worldwide. In the automotive industry, there were numerous cross-border acquisitions, such as Nanjing Automobile Group acquiring the British Rover, Shanghai Automotive Group acquiring South Korea’s SsangYong, and BAIC acquiring Sweden’s Saab. The most famous of these was Geely’s acquisition of Volvo.”

“Starting in 2002, Li Shufu had been eyeing Ford’s Volvo. After several twists and turns, he finally achieved his wish eight years later. Li Shufu’s acquisition introduced him and Geely to the world. The changes brought to Geely by this acquisition were evident. Volvo’s three factories, more than 10,000 patents, and complete technology research and development system could feed back into Geely’s tech R&D, forming a balanced product line and complete manufacturing system. The change brought to Li Shufu can be described as “impact.” Volvo’s supply chain, employee training system, safety test center, large-scale testing grounds, and global sales and service network taught Li Shufu to use global business thinking, experiencing the art and wisdom of management in the conflicts and integrations of different cultures.”

“At that time, the car called “Pride” had obvious patchwork traces: the front looked somewhat like a Mercedes, the body and chassis somewhat like a Xiali, the engine was purchased from Xiali, and the gearbox came from Fiat’s hatchback car. In any case, the car was made, and Li Shufu was very excited, sending out over 700 invitations nationwide, arranging 100 banquet tables, and hanging banners saying “Manufacturing cars that the people can afford” and “Warmly welcome the leaders to inspect Geely” on the streets of Linhai, where Geely is located, anticipating the arrival of guests.”

“Ten years later, Lan Shizi’s creative researchers conducted in-depth interviews with dozens of senior executives from Geely and Volvo from Hangzhou to Gothenburg, and published this book “The Era of New Manufacturing,” attempting to answer the previous three questions through the changes in Li Shufu and Geely.”

“Li Shufu was born in 1963 in southern Zhejiang. It is said that the adventurous gene naturally flows in the blood of the local people.”

“Liu Chuanzhi, Zhang Ruimin, and Zong Qinghou, Li Shufu”

“A successful businessman is good at discovering and exploiting market opportunities, acting with foresight and pursuing profits, carefully calculating risks and rewards”

“An entrepreneur is different; they are more focused on a particular career and persistently pursue it.”

“The changes brought to Geely by this acquisition were evident. Volvo’s three factories, more than 10,000 patents, and complete technology research and development system could feed back into Geely’s tech R&D, forming a balanced product line and complete manufacturing system. The change brought to Li Shufu can be described as “impact.” Volvo’s supply chain, employee training system, safety test center, large-scale testing grounds, and global sales and service network taught Li Shufu to use global business thinking, experiencing the art and wisdom of management in the conflicts and integrations of different cultures.”

“Following Li Shufu’s direction, it turned out the bamboo roots on the mountain had grown above ground in many places. Those in the know quickly explained to Li Shufu: “These bamboo roots need to grow underground for five years before emerging above ground, then they grow further from there.””

“Behind these words was the fact that the Chinese auto market exceeded 20 million in both production and sales, ranking first globally for five consecutive years. On the other hand, price cuts by joint ventures squeezed the survival space of independent brands, leading to an overall 16.24% year-on-year decline in the sales of self-owned brand vehicles. Geely Automobile’s sales fell by 22% year-on-year, the only decline in its 20 years of car manufacturing.”

“In the sluggish automotive market of 2015, the transformation battle began with the “attack from below” by the Borui model, ushering in Geely’s 3.0 era of premium vehicles. Interestingly, compared to the 22% sales decline in 2014, a year later, Geely Automobile led the self-owned brands with a 22% year-on-year sales increase. For An Conghui, president of Geely Automobile, who directed this turnaround, “2 million vehicles in 2020” is only Geely’s baseline.”

“This signifies that six years after Geely’s acquisition of Volvo, Li Shufu successfully built a global automotive manufacturing and supply chain system. Håkan Samuelsson, president of Volvo Car Group, believes that “China’s automotive industry has entered a new era of globalized production and export initiated by Volvo.””

““We have not failed Ford’s trust!” Li Shufu always appreciated Ford’s broad-mindedness and sense of responsibility as a giant in the global automotive industry. Li Shufu knew that money alone could not buy Volvo, and he valued Ford’s trust in him. International media have likened Li Shufu to China’s Henry Ford. As founders of their respective automotive brands, Henry Ford was born in 1863, and Li Shufu in 1963. Interestingly, Geely was founded in 1986, and 100 years earlier, in 1886, the automobile was invented by the Germans.”

“> We carved a stone of hope out of the mountain of despair. —Martin Luther King “I Have a Dream””

““In 2000, I first met Li Shufu when we participated in the ‘Dialogue’ program. At that time, Li Shufu said he wanted to build cars in China, which drew scorn from the audience. They didn’t trust him because he was originally selling motorcycles and was a private entrepreneur, while there were so many large companies involved in car manufacturing in China. Li Shufu adamantly said he would build cars, earning the nickname ‘Car Madman’.” Liu Chuanzhi, a longtime friend of Li Shufu and a representative of Chinese enterprises moving overseas, said at the 2015 launch of the new Volvo XC90.”

“To many, Li Shufu had three obvious deficiencies in car manufacturing: First, he had only about 100 million yuan in cash. How could he enter an industry requiring huge investment? Second, Geely was involved in motorcycles with no accumulated experience in the automobile industry. Third, and more importantly, car manufacturing was considered a state endeavor. How could a private entrepreneur succeed without government support?”

“Through joint ventures, China’s passenger vehicle industry eventually formed the “Three Big, Three Small, and Two Mini” [[1]](#note1n) situation, which became insurmountable. On the positive side, joint ventures provided a lifeline for China’s auto industry amid dire shortages of capital and technology. However, from another perspective, they also exerted invisible pressure on newcomers.”